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Should I Walk Away From My Condo?

When the housing bubble burst 5 years ago, property values plummeted and many were left with sky-high mortgages that they could not afford.  To make matters worse, the economy failed leaving many jobless and struggling to make ends meet.  While some have rebounded, most are still feeling the residual effects of the “Great Recession.”

Homeowners Associations suffer greatly when owners decide to walk away from their units or otherwise default on their financial obligations to the HOA.  However, this problem did not begin with the recession.  Historically, owners stop paying fees if they are unhappy with property management, dislike the Board of Directors, if the condo fees are too high or if there are restrictions on the use of their property that seem unreasonable.  In many instances, these owners decide to walk away.  When this happens, the HOA, with little money to pay its own bills, will often not have the means to seek a legal recourse against the owner. But if it does there will be serious consequences for the owner.  So if you are thinking about walking away, there are a few factors to consider:

  1. Foreclosure- in many jurisdictions, including DC and MD, HOAs have the option of initiating foreclosure proceedings. In many cases, the lender will step up to pay 6 months of the back condo fees.  What most do not consider is that the HOA can then pursue the owner for a deficiency judgment to collect the balance of the unpaid fees.  So the defaulting owner will not only have a foreclosure on his or her credit report but a judgment.  And in the District of Columbia judgments last for 12 years and can be renewed for another 12.
  2. Attorney’s fees- if the HOA goes after you, then in addition to the condo fees, late fees and interest they will also collect attorney’s fees as long as the bylaws allow them to.  Remember, you entered into a contractual agreement with the HOA when you purchased your unit.  Thus, the bylaws and other condominium instruments establish the terms of the contract and the manner by which the HOA can pursue you in the event of default.
  3. Bankruptcy- many owners think filing Chapter 7 can get them out of unpaid condo fees.  Think again.  If you have no assets and the bank takes back the title, then the HOA may be up the creek.  But if you retain ownership, any unpaid fees that accrue post-petition are collectable by the HOA.

In the words of Justin Timberlake, “Don’t be so quick to…walk away.”

Yaida Ford is an attorney licensed in DC and MD who specializes in HOA/condominium law.  For more information, feel free to contact her at